At London Summit, Islamic Finance Positions Itself as a Cornerstone of Sustainable Capital

October 22, 2025

11:03 am

A Global Convergence on Purpose-Driven Finance

The Global Sukuk Summit 2025 convened leaders from finance, government, and development institutions in London this week to explore how Islamic capital markets can accelerate sustainable finance worldwide. Hosted by the Islamic Development Bank Group (IsDB) in partnership with the Financial Times Group, the summit brought together investors and regulators determined to align growth with impact.

Dr. Muhammad Al Jasser, Chairman of the IsDB, opened the event by describing sukuk, asset-backed and Sharia-compliant bonds, as “capital with purpose.”

He noted that sukuk have evolved from a niche product to a globally recognized tool for financing real-world impact. “Every dollar raised,” he said, “is linked to something tangible: energy, transport, healthcare, or education. It’s finance that serves people, not speculation.”

What Makes Sukuk Different

Unlike conventional bonds that generate fixed interest, sukuk are designed to comply with Islamic law, which forbids interest (riba) and speculative activity (gharar). Instead of lending money for a guaranteed return, sukuk investors share in profits generated by underlying assets or projects such as renewable energy plants, roads, or schools.

Each sukuk certificate represents partial ownership in a tangible asset, ensuring that the investment is grounded in the real economy. This asset-backing distinguishes sukuk from traditional debt instruments and aligns with Islamic finance’s core values of fairness, transparency, and risk-sharing.

Funds raised through sukuk must also be used for ethical purposes. Projects involving gambling, alcohol, tobacco, or arms manufacturing are excluded, underscoring the sector’s emphasis on moral responsibility. Common sukuk structures include leasing (ijara), cost-plus sale (murabaha), and joint ventures (musharakah), all of which link investor returns to productive economic activity.

The Rise of Sukuk as a Global Asset Class

Once considered a niche financial tool, sukuk have grown into a robust and rapidly expanding global asset class. Since 2003, the IsDB has mobilized more than US$55 billion through nearly 80 issuances, including close to US$6 billion in green and sustainability-linked sukuk.

The bank marked a new milestone at the summit, celebrating the listing of a €500 million green sukuk on the London Stock Exchange, underscoring investor confidence in Islamic finance as a credible and scalable vehicle for sustainable investment.

Speakers throughout the day emphasized that sukuk are uniquely positioned to connect financial capital to real-world outcomes. By linking investment to assets and impact, they bridge the divide between ethical intent and economic return.

Regulatory Collaboration and Market Integration

Victoria Saporta of the Bank of England highlighted the importance of harmonized regulations to help Islamic finance expand its reach. She argued that establishing consistent global standards and greater transparency will enable sukuk to integrate more deeply into mainstream markets, unlocking capital for infrastructure, climate adaptation, and social development.

Panelists called for stronger collaboration among regulators, sovereign issuers, and development banks to streamline frameworks and expand the pool of eligible sukuk assets, including those tied to environmental and social outcomes.

A Moment of Opportunity

Participants agreed that Islamic finance stands at a defining moment. With global investors increasingly seeking to align profit with purpose, sukuk offer a model built on ethics, transparency, and shared prosperity.

For IsDB and its partners, the summit was more than a meeting; it was a declaration of intent. Islamic finance, once on the margins of global markets, is now poised to become a central force in channeling capital toward a more equitable and sustainable financial future.